The Trump administration is pausing more than $1 billion in Medicaid payments to California and Minnesota due to “suspected fraud and noncompliance,” U.S. Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. said in a Tuesday press conference.
U.S. Centers for Medicare and Medicaid Services (CMS) will defer approximately $867.5 million in federal Medicaid payments from California and $199 million from Minnesota, according to a July 21 press release.
The agency clarified the action is payment deferral, not permanent funding cuts. Both states will have the opportunity to provide documentation that claims meet federal standards.
“If those states want that money, they need to provide documentation that these payments are legitimate,” Kennedy said in the press conference.
CMS says it reviewed certain California in-home care programs after it identified “spending growth that far exceeded national trends” and other claims needing additional documentation. Similarly, CMS reviewed claims in 14 high-risk service areas in Minnesota.
HHS also plans to expand its exclusion authority, Kennedy announced, enabling both CMS and HHS Office of Inspector General to push out program participants they suspect of fraudulent activity.
CMS announced in May that $1.3 billion would be held from California, which CMS Administrator Mehmet Oz, M.D. said was the largest deferral ever made by the agency. Similar actions were announced against Minnesota in February.
Fierce Healthcare has reached out to HHS for more information, including a clarification on whether the newly announced deferral totals include any funds from those previous actions.
“CMS is done trying to chase down stolen and misused funds after they’ve already left the building,” Oz said in a statement. “That’s why we’re deferring payments with respect to certain high-risk services within the Medicaid programs in California and Minnesota as part of our proactive new approach to program integrity. By stopping waste and fraud before the check clears, CMS is delivering record-high savings for taxpayers and ensuring that their hard-earned dollars reach the vulnerable Americans Medicaid is meant to serve.”